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The No. 1 Thing Home Builders Get Wrong With Customer Experience: Warranty Service

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The No. 1 Thing Home Builders Get Wrong With Customer Experience: Warranty Service

Don't neglect the warranty phase of the homebuying journey. How upgrading your warranty program can gain trust and meet the expectations of today’s homebuyers


By Jimmy Diffee January 26, 2022
woman on phone customer service call
The warranty experience is what buyers remember, and therefore are more likely to write or post a negative review about, influencing their opinion of the entire homebuying journey. | Photo: Prostock-studio / stock.adobe.com
This article first appeared in the February 2022 issue of Pro Builder.

Builders often refer to their warranty departments as Customer Care or Customer Service. But some­times the building company’s interests in that area overshadow the interests of its customers. That can be a big problem for today’s homebuyers because customer expectations for warranty service are at an all-time high.

You can attribute that to the auto industry and its “bumper-to-bumper” policies, which cover most anything that goes wrong during the first three to five years of owning a new car, giving customers nearly complete assurance that the automaker stands behind its product and workmanship.

So it follows that when those same buyers are purchasing a new home, they assume they will get the same treatment as when they’re buying a car—even though the cost of a house is 10 times that of a new car. Realistic or not, it’s what today’s buyers expect.

Another reason why the warranty phase of a homebuyer’s journey is so important is that it’s one of the last things a customer remembers about the entire experience. They think, “I just moved into a brand new home and I can’t get my builder to come out and fix things. They must not care about my house after it’s built.”

Even if everything leading up to that point has been fantastic, the warranty experience is what buyers will remember—and what will make them more likely to write or post a negative review, regardless of how well everything else may have gone.

The third and biggest reason is that selling homes online hinges on your warranty. In fact, aside from online reviews of your company and your homes, the biggest trust-builder for dispelling doubts and alleviating anxieties about buying online, sight unseen, is your warranty.

Trust is everything to these buyers, and if you plan to sell homes in the future, you need to get it right.


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Home Warranty: What Home Builders Currently Get Wrong

The CEO of a top-50 builder once told me something that underscores why home warranty currently misses the mark with buyer expectations: “We can’t afford to invest any more money in warranty than is absolutely necessary.”

I understand the logic, when the current business model for almost every builder shows warranty service as a cost center. Making repairs detracts from the bottom line and therefore should be minimized to maintain profitability. As a result, determining what’s in or out of a warranty becomes a major point of contention between builder and buyer.

The reality is that nearly all builders’ customer sur­vey scores plummet after the home is delivered because the expectation that the builder will take care of the customer if anything goes wrong is not met in the eyes of the buyer. 

Despite often using their warranty as a selling tool with a “Don’t worry, we’ll take care of you if anything goes wrong” message, the reality is that nearly all builders’ customer sur­vey scores plummet after the home is delivered because that expectation is not met in the eyes of the buyer. And the only way to turn that around is to rethink how warranty fits into the bigger picture of your business.

There are other reas­ons why warranty can negatively affect the customer experience. Consider the difficulty of managing trade part­ner schedules. Picture this scenario: It’s three weeks before Christmas and a homeowner notices nails popping through the dining room paint where the holiday family gathering is set to take place. Fixing that unsightly issue likely means frequent calls between you and several trades that need to make multiple visits to the home on different days—a process that actually takes weeks or months (certainly not three days).

But through all of that, the buyer doesn’t know that the paint sub has 30 other homes on his schedule and this one touch-up job got lost in the shuffle. All they know is that their dinner guests are staring at a big patch of unpainted drywall in the brand new dining room—not the lasting impression any builder wants to leave.And many builders don’t realize it, but we often make it difficult for buyers to submit warranty requests. We force buyers to use non-user-friendly forms online or clunky back-office systems, assuming they remember how to find them or to log in. I know of more than one builder that actually turned off their live chat because customers were using it for service requests instead of sales inquiries.

How to Fix the Home Warranty Process

The first step we should take is to remove all barriers to submitting warranty requests.

Keep it simple, with a prominent phone number or live online chat—preferably both—and aim for re­sponse times measured in minutes, not hours or days. If a customer would rather text or email photos or video of the problem, enable that opportunity and tag the images to their case file.

Also understand and respect that not all people are comfortable with your technology. Find out what’s easiest for buyers, using a CES (customer effort score) to measure it. With that, at the completion of each service call, ask: “How easy did we make it for you to handle your issue?” The best warranty experiences are painless, from inquiry to resolution.

The greatest opportunities await those builders willing to rethink how warranty fits into the bigger picture of their business.

Next, empower your frontline associates to focus on the relationship. Someone who bought a home from you inherently wants to believe it was a good decision. They want to feel like the person answering the phone has their back and will do what it takes to get the issues resolved.

Most customer care reps I’ve met really want to help, but often aren’t empowered to do so. My advice: Don’t put inexperienced “admins” on the front line with the sole responsibility of data entry. Hold them accountable to follow up all of the way through a warranty resolution. Some of the best reviews I’ve read were written about customer care reps who went above and beyond, sometimes driving to the customer’s house themselves to fix a towel bar or do paint touch-ups.

Rethinking the Home Warranty: A New Business Model for Home Builders 

The greatest opportunities await those builders willing to rethink how warranty fits into the bigger picture of their business.

Consider reframing your warranty program as a chance to delight, rather than as a cost center. What’s the value of a happy customer versus a disgruntled one? Factor that equation into your business model to be a point of differentiation that can result in increased market share.

Also, instead of seeing houses merely as a product, ponder the experience of actually living in one of your homes; that is, consider the long-term service strategy, creating new value for buyers well after closing. This approach can create new revenue opportunities that offset typical repair costs and result in customers for life. For example, companies such as Virtuo partner with builders to offer new-home buyers concierge services including moving, lawn care, and cleaning services, among others.

Here’s another way to think of it: as the “Dollar Shave” model of selling an initial product at a low price (the razor)—potentially below cost—followed by consumables or subscriptions (the blades), where the real profits are made. Some builders are already taking this tack with great success, and we’re just beginning to scratch the surface of the multibillion dollar home services industry.

Done right, the experience of living in a new home should be the most delightful part of the homebuying journey. In most cases it is, but builders don’t usually get credit for it due to a poorly executed (or shortsighted) warranty program. It’s time we rethink the status quo and raise the bar for customer experiences.

 

Written By

Jimmy Diffee, principal of Bokka Group, monitors a wide range of home building trends. He sees and judges technologies and digital content for new home builders at events and competitions such as PCBC Speaker Sessions, the National Sales & Marketing Awards, and the International Builders Show Best of IBS Awards. Jimmy is author of the annual Home Buyer Conversion Report, the industry’s leading research showcasing technology’s influence on new home sales. Write him at [email protected].

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